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Would Like Advice For Timber Tax Exemption In Texas

Started by GuyInHuntsville, March 15, 2014, 01:06:10 PM

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GuyInHuntsville

Hi, I posted this in another forum but found this one and think this is where it needs to be. I'm new to this site. Great site! Can you guys help me?

Hi, I'm really new to this subject and was wondering if anyone can give me some advice about this? I'm in the process of buying 15 acres of wooded land in Walker County Texas and it currently has a timber exemption on it. I like saving on taxes but I don't really want to give up any of the trees (mostly pines) except what's necessary to clear for building a home. And if I did allow select cutting I'm worried about the damage that this would do in terms of the land's appearance, stumps, branches left all over, ruts, etc...Doesn't seem worth it to me for this size of land. In this case should I drop the exemption when I take ownership of the property? Can anyone tell me how this exemption works and what it would mean for me if I kept it in place? This will be the first piece of land I've ever owned by the way. Thank you for reading.

ohwc

I will go more in depth for you. The timber or agricultural exemption in Texas changes if you change the use. Build on it etc. You can change the use for only what you are using at that time. Note any portion of the property that you change the use on you will owe 5 years in back taxes of the difference between the exemption and regular tax rate.. and in some cases also interest on that amount adjusted for 5 years. Selective harvesting can be done in many ways depending on how much you want to get out of the sale. Even if you do not manage it you will have stumps dead fall etc. on the property just like you would if you should have doing sustainable low impact harvesting. You can keep the timber exemption there are just rules that you have to follow and the local authority can guide you on this.

Texas Ranger

You can cut out a one acre tract for the homestead, leave the rest in timber.  What you do with that timber is up to you, but to keep the exemption you need a management plan, and then some activity over the years.  Like OHWC says, you change the exemption and a fairly painful penalty is applied.  There is no requirment to cut trees, it should all be in your management plan, Timber Stand Improvement (TSI) is a useful tool in making the woods better, selective harvest at some point will keep the stand healthy.  There is NO requirement to clear cut.  Part of the plan will cover game management, site preservation, etc.  Get a consulting forester to write a plan around your goals, and work the plan.  In this neck of the woods (two counties over in Polk County) I would just about bet your stand is young and doesn't have many needs at this time.
The Ranger, home of Texas Forestry

GuyInHuntsville

I really appreciate both of your responses. I thought this would be a long topic but you seem to have summed it up very well. I'm extremely glad to hear there's no requirement to cut trees. I can definitely do sustainable low impact harvesting. When I first learned from OHWC about the back taxes I knew I couldn't afford to drop the exemption but figure out how to make it work without supposedly losing to many trees in the future...Now that's debunked I want the exemption. Will the exemption stay in place automatically when I take ownership in a couple of weeks?

Texas Ranger, I was reading elsewhere on this site about you quoting a landowner in Harris County a management plan. Do you still evaluate land/write these plans? (The property is east of Huntsville.) And if not where do I go to find a Forester? By when would I need to have my own plan? (By the way I'm very familiar with Livingston -really like that town- and we drive through it about every month and a half to visit our favorite state park Martin Dies Jr.)

Thank you both very much for the information!

Texas Ranger

The exemption will not stay in place, you have to apply for it, which is not difficult.  One thing to remember when talking with the tax folks is that the history of the land stays with the land, not the ownership.  If  you have trees on the place, it has a previous exemption and you apply, that will be your five year history.  You also have some time to make the application, the tax folks will ask  you to fill out a "1-d-1" form, a fairly simple question and answer form.

I do write plans, and there are a bunch of other folks that write plans.  Really your choice on who you use, or  you can write your own plans, as long as they are based on sound forestry principle.

This is the state list of approved consultants.   http://txforestservice.tamu.edu/uploadedfiles/frd/referral.pdf
The Ranger, home of Texas Forestry

GuyInHuntsville

Thank you Texas Ranger. I'll be contacting you in about a month as I prefer to have professional guidance with this. When I close at the title company I'll swing by the tax office and pick up the 1-d-1 form. It's funny that when I came to this website I was dreading this timber exemption and now after learning more about it here from you and OHWC I'm looking forward to it (along with the tax savings). I really aprreciate everything!

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